Guide – How to Use Multiple Bank Accounts to Save Money

EPF Last Update: May 21, 2020

While consolidating all of your finances within one bank may seem like an easy solution, you’ll find that many of its products often lag the competition. Examples include low interest rates for savings accounts and CDs as well as high checking account fees that eat away at your balance each month.

And while dividing your bank accounts across multiple institutions may seem like a hassle at first, doing so will save you plenty of money over time.

If you’re interested in taking the plunge, we have all the tips you need to get started.

Find The Best No-Fee Checking Account

It’s no secret that bank fees can wreak havoc on your finances. For checking accounts, the average monthly fee ranges from $7 to $10. And while this outflow only amounts to a cup of coffee or small lunch, on an annual basis, it adds up to $84 to $120 per year. If we extrapolate this over a 10-year period, you end up paying $840 to $1,200 in total costs. Keep in mind though, this is just one example. Your out-of-pocket costs increase even more if we factor in monthly maintenance fees, wire transfer fees and the cost of ordering physical checks.

To save money, consider an online no-fee checking account.

As a great option, Ally Bank’s Interest Checking Account offers 0.10% interest on all balances below $15,000. As well, the online bank is a member of the Federal Deposit Insurance Corporation, so all balances are insured by the U.S. federal government up to $250,000.

Now let’s talk about fees.

At Ally Bank, there are no fees for:

Bill payments.

Standard or expedited ACH transfers.

Overdraft transfers.

Incoming wire transfers.

Cashier’s checks.

Ally Bank standard checks.

Sending money electronically using the Zelle mobile app.

Monthly maintenance.

As well, Ally Bank will reimburse you $10 per month for ATM fees charged by external operators and the company also offers 24/7 customer support so you can talk to a human at any time.

What About The Best Savings Accounts?

If you already have a no-fee checking account and it’s your savings account that just doesn’t cut it, the options below can help you make the switch. All savings rates apply to balances of less than $10,000 and all intuitions are FDIC insured, so you know you’re money is protected.

Online Bank:

Average Savings Rate:

Citizens Access

2.35%

Marcus: By Goldman Sachs

2.25%

Synchrony High Yield Savings

2.25%

HSBC Direct Savings

2.22%

Barclays Online Savings

2.20%

Ally Online Savings

2.20%

American Express Bank

2.10%

Discover Bank

2.10%

As our recommended option, Marcus: By Goldman Sachs requires a $1 minimum balance to earn its 2.25% APY and there are no hidden fees. The only requirement is that you stay within the federal limit of six transactions per month.

As a comparison, Citizens Access has a higher savings rate but requires a $5,000 minimum to be eligible.

Does Opening a New Bank Account Affect My Credit Score?

In most instances, no.

When you become a new client with a bank, they often screen your financial history but don’t perform a hard credit pull. Most rely on soft credit pulls, which have no effect on your credit score. However, ask the institution ahead of time if it will conduct a hard credit pull. If so, the process can shave anywhere from 5 to 25 points off of your credit score.

Make a List of All Your Checking Account Transactions

Before opening your new checking account, make a list of all your financial transactions. This way, once your account is approved, you can have it up-and-running and fully functional right away.

You should make a list of:

All direct deposit accounts.

All bill or subscription payments, whether monthly or annually.

All transfers you make on a recurring basis.

All credit cards you want linked to the new account.

All savings or external checking accounts you want linked to the new account.

Moreover, plan to sign up for mobile banking and order checks so both options are available to you if you need them.

Apply for Your New Checking Account

After you complete step two, it’s time to open your new checking account. Once it’s approved, circle back to your checklist. Take all of your direct deposit, bill payment and subscriptions and add the account numbers to your new checking account.

Keep in mind though, we recommend you keep some funds in your old checking account for at least two-weeks. While you’re in the process of making the switch, some bill payments may still be in limbo. Because of this, your best bet is to wait at least two-weeks before officially closing your old account.

Close Your Old Checking Account

Once you’ve completed all of the instructions above, now you’re ready for the final step: closing your old checking account. According to the Consumer Financial Protection Bureau (CFPB), to close an account, you should call the bank or provide the account information in-person. Moreover, once you’ve requested the closure, state law requires the institution to fulfill the instructions within a “reasonable amount of time.” In general, this translates to about two-weeks. Last, the CFPB also recommends you get written confirmation that the account has been closed.

Conclusion

While dividing up your bank accounts may seem like a hassle at first, you’ll quickly realize the cost savings are more than worth the trouble. Whether it’s eliminating checking account fees or obtaining a higher yield or your saving balance, a tactical approach to where you keep your money goes a long way. With increased competition in the banking space, institutions are always looking for a way to lure new customers. Sometimes it’s saving you money, other times it’s paying you more. By staying flexible, you can take advantage of these great offers when they arise. And best of all, there is little downside in the process.

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